【SMM Analysis】Weekly Review of Indonesian Nickel Market - May 15

Nickel Ore

1. Price Dynamics and HMA Revisions The Indonesian nickel market experienced overall price volatility this week. The Ministry of Energy and Mineral Resources (ESDM) has officially released the Nickel Mineral Benchmark Price (HMA) for the second half of May 2026.

• Nickel HMA: $18,849.3/dmt (up $1047.15 or 5.88% from $17,802.14 in early May).

• Cobalt HMA: $55,854/dmt.

• Iron Ore HMA: $1.58/dmt.

• Chrome Ore HMA: $6.37/dmt.

Current port-delivered prices for 1.6% grade pyrometallurgical ore (saprolite) stand at $77.8-80.8/wmt, an increase of $3.3 from last week, remaining largely stable. In contrast, 1.2% grade hydrometallurgical ore (limonite) is priced at approximately $28-33/wmt, stable compared to the previous week.

2. Supply-Demand Fundamentals and Weather Impacts

• Pyrometallurgical Ore: The output of large mines will increase slightly in May. Although Indonesia has basically entered the dry season, the Central and South Sulawesi regions encountered abnormally heavy rainfall this week. Affected by this, the land transportation and barge transfer plans of some small and medium-sized mines were forced to be interrupted. Although the RKAB approval progress has reached 90%, the spot supply of high-grade pyrometallurgical ore remains tight; even so, the market's expectation of looser supply has significantly strengthened compared to the previous period. Despite RKAB approvals reaching 90%, spot supply for high-grade saprolite remains tight. However, market expectations for easing supply have strengthened. Notably, the average grade of ore accepted by smelters has begun to trend downward. While the decline is not yet significant, some smelters have started blending low-grade ore to mitigate the pressure of high-grade shortages and surging costs. Current pricing follows either a "fixed price" or "HPM + $7–$10 premium" model. Furthermore, some smelters are implementing standardized benchmarks for pyrometallurgical ore (Cobalt 0.05%, Iron 20%, Chrome 1%), regardless of actual ore variations. Bon have shrunk to minimal levels as most are now covered by fixed premiums.

• Hydrometallurgical Ore: Limonite prices have trended downward, failing to follow the increase in the new HPM. Demand is under pressure due to potential MHP production cuts caused by a sulfur shortage in May. With relatively stable inventories, smelters continue to exert strong downward pressure on prices.

3. SMM Internal Estimates The new pricing formula has led to increased price divergence and amplified volatility, particularly influenced by higher associated cobalt content in certain ores. SMM calculations show that the new HPM for 1.2% grade limonite is approximately $49.95, significantly higher than current market assessments. The new HPM for 1.6% grade saprolite is $70.83; the inclusion of higher cobalt content in the new formula has markedly amplified price fluctuations. While actual market transaction prices currently remain above this benchmark, the gap is steadily narrowing.

4. Regulatory Quotas (RKAB) and Market Outlook According to the ESDM, RKAB approvals for 2026 have reached approximately 90%. SMM statistics indicate that the total approved quota for Indonesian nickel ore stands at roughly 230–240 million wmt. The final quota is widely expected to be finalized by the end of April.

Due to the convergence of reduced RKAB expectations, resource uncertainty, and high-grade ore shortages, some smelters have increased trade dividends and premiums to secure supply. The market is closely monitoring Weda Bay Nickel (WBN). Due to a severely depleted RKAB quota for 2026, WBN plans to enter a "maintenance and care" phase starting in May. The company is actively pursuing a quota increase to alleviate the ore shortage at the IWIP industrial park. During this period, its downstream NPI plants will consume existing strategic inventories to maintain operations.

5. Regulatory Revisions:

The market has also been closely monitoring an announcement made on Monday (May 11, 2026) by the Minister of Energy and Mineral Resources, Bahlil Lahadalia. He declared that the government would postpone the plan to impose export duties (bea keluar) on downstream nickel products. This delay is intended to allow for the development of a "win-win" pricing formula that balances the interests of both the state and private enterprises. While the primary goal of this duty is to push the nickel industry—which currently only achieves 40% deep processing—toward higher value-added products (and away from a sole reliance on Nickel Pig Iron/NPI), the government has decided to temporarily "shelve" the proposal after considering feedback from industry stakeholders.

Nickel Pig Iron

"Market Impasse Amid Supply-Demand Divergence: NPI Prices Hold Firm at High Levels"

The average price of SMM 10-12% NPI average price fell by RMB 4.5 per nickel unit week-on-week to RMB 1146 per nickel unit (ex-works, tax included), while the Indonesia NPI FOB index increased by USD 0.97 USD per nickel unit to an average of USD 147.75 per nickel unit. This week, the high-nickel pig iron market first declined and then rose. This week, the high-grade NPI market maintained a high-level volatile pattern. A significant divergence between supply and demand persisted; prices shifted slightly downward as cost support battled weak demand, leading to overall soft market sentiment. From the supply side, Supported by production costs, sellers initially showed strong intent to hold prices firm, with high-grade resources still commanding a clear premium. However, as sentiment shifted mid-week, some enterprises eased their firm-pricing stance due to shipping pressures and arbitrage opportunities. Combined with weakening stainless steel prices, low-priced resources began entering the market, leading to fragmented transaction prices and a loosening of supply-side support. From the demand side, Downstream steel mills remained cautious. Weak stainless steel sales, lower scrap prices, and a softening futures market have fueled "price phobia" (fear of buying at peaks) among end-users. In the short term, the NPI market is expected to remain range-bound at high levels. Strong cost support and tight spot availability will provide a floor for prices, preventing a sharp drop; however, the sales pace of downstream stainless steel will continue to cap any significant upside.